• Startups
May 1, 2020
Written By: Collin West and Nihar Neelakanti

Eren Bali, CEO of Carbon Health, on The Future of Healthcare

Eren Bali, CEO of Carbon Health, on The Future of Healthcare

With rising healthcare costs, a rapidly increasing complexity, and now a national pandemic, entrepreneurship in the healthcare sector is both challenging  and incredibly imperative. 

Eren Bali, however, is poised for the challenge. 

Eren Bali is the Founder and CEO of Carbon Health, a company on a mission to make essential healthcare services available to everyone by being a fully vertically integrated tech-enabled healthcare provider. As one of the most active COVID response companies with 15 active clinics, Carbon Health is looking to use its learnings to further transform modern healthcare in a post-pandemic world.

Prior to Carbon Health, Eren co-founded Udemy, an online learning platform where over 50 million students learn from 57,000 instructors teaching 150,000 courses in over 65 different languages. Besides recently achieving unicorn status with a valuation north of $2B, Udemy has received praise for helping to make education more accessible to anyone around the world. 

Increasing access to human birthrights via technology is one of the primary characteristics of underpinning Eren’s entrepreneurial career. Eren looks back to his childhood days in a small provincial town in eastern Turkey called Malatya, where he spent his early education in a single-room schoolhouse where one teacher taught all the grade levels. Today, many of the kids in Malatya have smartphones and access to the Internet, and learning virtually about any subject is a few finger taps away. 

Education has gained considerable benefits from modern technology, whereas healthcare has lagged significantly behind in leveraging the same luxuries. 

“I was interested in healthcare because it is the most critical thing people should have access to,” comments Eren. 

I was interested in healthcare because it is the most critical thing people should have access

Eren reflects back on a formative experience. His mother, as he would eventually learn, had neurosarcoidosis, an uncommon but potentially serious inflammatory disease that affects the nervous system. 

“Since the condition was undiagnosed, we had no idea what was going on,” says Eren. 

Eren would go back to his home country of Turkey, where his sister, who is also a physician, lined up a series of specialists to diagnose. During the whole process, Eren turned into an astute learner of the healthcare process.

Thankfully, Eren’s mother’s condition was diagnosed, and she’s ok, but the eye-opening first-hand experience of the inefficiencies of modern healthcare stayed with Eren.

At first, Eren started looking for healthcare companies to invest in as an angel investor but ultimately felt that they were missing something. 

“Healthcare is very complicated, and many tech entrepreneurs usually find something tangentially away from the complexity such as concierge service or premium healthcare,” says Eren. “There’s much more money flowing there [in terms of revenue and investors], but it didn’t address the fundamental issues of healthcare. I wanted to find entrepreneurs willing to get their hands really dirty in order to fix a huge problem. I found that in order to do this right, I had to do it myself rather than support from the sidelines.”

How Healthcare Broke Itself

In Eren’s eyes, the healthcare issues were fundamental– far deeper than surface-level inconveniences. 

In order to understand where healthcare is going, Eren implores us to explore major trends in the sector over the past few decades. 

“If you go back 30 years, the healthcare system was mostly a collection of individual physicians,” says Eren. “Since then, it has been consolidated at a very aggressive pace. Following this consolidation came more challenging regulations and increases in overhead costs; two factors that made it too hard for small independent physicians to survive.” 

Most large systems also have monopolies. Hospitals, alongside Walmart and universities, are the largest employers in every state. This gives large house systems an incredible amount of local leverage with state and city politicians. 

“Today, we have much more independent specialists, but general healthcare has moved from individual clinicians to everyone being employed by large house systems.”

This over-consolidation of healthcare has shown its costs, as the average taxpayer has seen throughout the years. 

“Hospitals are fairly bad at running hundreds of different verticals they own at the same time,” says Eren. “They’re poorly equipped to run all of them and the inefficiencies are obvious.” 

“Hospitals are fairly bad at running hundreds of different verticals they own at the same time,” says Eren. “They’re poorly equipped to run all of them and the inefficiencies are obvious.” 

Where is Healthcare Headed?

Carbon Health

Hundreds of startups have their scopes on the inefficiencies of the current behemoth healthcare system. 

“There is a strong unbundling trend,” says Eren. “Hospitals are losing many of their verticals such as imaging centers, urgent care, ER visits to fully vertically-integrated companies. These newcomers are taking slices out of the general healthcare system and doing a better job.

The payer side of healthcare is also positioned for change. Although it’s one of the more complicated aspects of healthcare with frustrations-aplenty, the payer side is lucrative. Eren sees healthcare companies evolving to include some payer and insurance company, if not completely absorbing the payer entity. 

“Insurance companies may end up acting as subcontractors for risk with the providers, taking on some level of risk to provide services to the providers,” says Eren. “Companies that are best at managing risk are far more effective. Kaiser-Permanente owns the payer side and provider side, and owns a huge market share in which they can operate. Insurance companies are pressured to compete at a much higher level. Everyone will look like Kaiser-Permanente at one point.” 

Additionally, video-based care is likely going to become more popular, especially so due to COVID-19. 

“Hospitals will likely end up being mostly for in-patient needs and surgical routines,” says Eren. 

The regulatory environment is a consideration to be careful with, but Eren doesn’t see regulation as an enemy, or even it is the hardest of the challenges of healthcare entrepreneurship.

“I think by its nature, regulation in healthcare aims to do good,” says Eren. “Healthcare is the difference between life and death, and its customers are price-insensitive by default. For example, if a primary doctor says you might have cancer and recommends you go see a specialist, you’re not going to think twice about the cost. There are regulations in place that prevent primary care doctors from receiving kickbacks from specialists for referring patients. Obviously, this is good.” 

Eren brings us back to the healthcare public enemy number one: its own complexity. 

“The reason we haven’t seen disruption isn’t regulatory, it’s because its the most complicated service industry.” 

“One of the most expensive resources of any country is the skilled physician’s time, and we do a horrible job of optimizing for it,” says Eren. “Cab drivers are far more efficiently used than doctors.” 

“Let’s compare the healthcare industry with the transportation industry,” proposes Erin. “It wasn’t easy for Uber or Lyft to disrupt transportation, but it is relatively straightforward: Customer is at Point A and wants to go to Point B. Not to over-simplify, but for the app, you just need a payments feature, a GPS feature, and a means to connect drivers with passengers, and you’re probably good to go.”

One of the most expensive resources of any country is the skilled physician’s time, and we do a horrible job of optimizing for it,” says Eren. “Cab drivers are far more efficiently used than doctors. 

“Now, healthcare requires a wide variety of factors: such as medications, reimbursements, followups, diagnoses, and so on. It’s very complicated. It hasn’t been disrupted yet because it’s really hard. Most entrepreneurs trying to fix it are coming into a gunfight with a knife. And not many companies are making the substantial investment needed to disrupt this market.”

Eren sees Carbon as the first truly vertical tech-enabled healthcare system, one that places the patient at the center and designs everything around the patient. 

“We’re the only tech-enabled company tackling the mass market in healthcare. Carbon is a hybrid between primary, urgent, mental, and pediatric care models,” comments Eren. “We’re developing a clinic that is virtual as well.”

Carbon currently has 15 clinics, with an aim to get to 150 by the end of 2021. By 2024, Eren sees 1,000 Carbon clinics with a strong virtual offering. 

“ From end-to-end, we own the technology, Eren says proudly. “There isn’t anything inside Carbon that isn’t Carbon. We own the process from start to finish, from scheduling to walk-ins, to health records, to payments.” 

Final Thoughts

Healthcare’s current COVID quagmire has brought many fundamental inefficiencies to light, but optimistically, this may inspire a new wave of innovation in the sector.

From a bird’s eye view, we see the failure of the old industry to leverage the low-cost luxuries afforded by advances in technology as mainly an issue of convenience.

Understanding the failure to implement simply convenience-level features implores one to take a look under the hood– an inspection that reveals a complicated, but somewhat functional, entanglement of consolidation, bureaucracy, and local monopolies. 

This mess has often come at the expense of the patient in the form of exponential healthcare costs, hours of waiting time, and unfortunately, life. 

However, where an entrepreneur like Eren Bali sees inefficient complexity, he sees opportunity. He points out that in order to solve healthcare’s problems, we need to find a way to simplify it, and then build it up in a way that caters to a tech-enabled patient-centric experience. 

“If you set the right infrastructure platform and work style, you can provide a better healthcare experience without increasing the cost at all,” says Eren. “You can make it a much more measurable qualitative experience. A technology-driven experience that allows for even better, more patient-centric care, that you don’t need to come from a particular financial class to get.”

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